key report from Mckinseys1 in 2009 found that
2.5 billion adults, just
over 50% of the worldsâ&#x20AC;&#x2122;
adult population do not
use formal financial services. Of that figure 62% of adults living in the developing nations of Asia,
Africa, Latin America and the Middle
East are excluded.
A recent survey studied the domestic
remittances market in sub-Saharan
Africa. It discovered that 31 percent of
adults used only informal, cash-based
methods to move money domestically â&#x20AC;&#x201C; such as informal money carriers,
sending money via friends, or simply
carrying cash themselves to deliver
it in person. (Bill and Melinda Gates
Foundation).2
Mobile money can, and is, replacing
this informal system and spreading
the use of banking facilities particularly in East Africa â&#x20AC;&#x201C; bill payments,
social security payments, microinsurance and more, to the unbanked
population of the world.

04

In Africa and South East Asia, the
number of GSM mobile connections
has doubled in the last four years,
in Southern Asia, it has more than
1. http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2012/06/110109halfunbanked_0_4.pdf
2. http://www.gallup.com/poll/155132/Payments-Money-Transfer-Behavior-Sub-Saharan-Africans.aspx
3. http://www.newtimes.co.rw/news/index.php?i=15289&a=64632

tripled within the same timeframe.
The potential for mobile technology, in
particular mobile money, to improve
peoples lives vastly increases and the
opportunity for increased social inclusion arises.
Whilst the developed nations in North
America and Europe are seemingly
hesitant in adopting mobile money
(less than 20% of all UK consumers
want to use their mobile phones to
make payments) it still seems that the
rise of mobile money phenomenon is
unstoppable.
The International Telecommunication Union (ITU) predicts that there
will soon be as many mobile phone
subscriptions as people inhabiting the
planet, with the figure set to nudge
past the seven billion mark early in
2014.3

The Rise of Mobile Money

05

The rise of Mobile Money

The rise of Mobile Money

06

ecent statistics from yStas4
for 2012 found that mobile
payments increased by
70% in 2012 mostly resulting from massive growth
in China, South Africa and
India. Three digit percentage growth
in North and Latin America is predicted showing that mobile money is
here to stay.
The mobile money industry is expected to grow from $13.8 billion in 2013
to $278.9 billion by 2018, according to
a study released this month by global
research group MarketsandMarkets,
which estimates there will be about
5.3 billion mobile phones worldwide
this year5.
It is an industry which is continuing
to grow rapidly. There are currently
150 live mobile money services, 41 of
which were launched in 2012. There
are almost 30 million active users
of mobile money services who performed 224.2 million transactions
totalling $4.6 billion during the month
of June 2012. There are 81.8 million
registered customers globally and, in
June 2012, there were twice as many
mobile money users than Facebook
users in Sub-Saharan Africa. With
over 520,000 registered agent outlets,

there are now just as many mobile
money outlets globally as Western
Union points of sale.6
Of the success stories globally East
Africa stands out with Kenya, Madagascar, Tanzania and Uganda now
having more mobile money accounts
than bank accounts. There were more
than half a million mobile money
agents in June 2012, and there are
now more mobile money agent outlets than bank branches in at least 28
countries.
So far, the most popular use for mobile money has been domestic person-to-person money transfers. This
replaces risky, slow and inconvenient
cash transactions with a much safer,
cheaper and more convenient means
via the mobile channel.
There is a strong global skew in the
uptake of mobile money with the
developing world taking the lead. Six
of the eight fastest growing mobile
money providers are in East Africa.
Pakistan and the Philippines also have
strong growth

obile money (m-money)
is the term used for using a cell phone to make
payments to others using
a cell phone where value
can be stored on an “mwallet” before and after
the transaction. A sender loads money
into his m-wallet by going to a registered “agent” (sometimes a financial
institution, more often not); then the
sender can use a secure electronic
approach to transfer funds to the
recipient’s m-wallet. The recipient can
either store the funds in his m-wallet
for further mobile money transactions
or go to an agent to convert the mobile money to cash.” USAIAD/GSMA
definition.7
Mobile money is the provision of financial services through a mobile device.
This encompasses a range of services
including:
•
•
•
•
•
•
•
•

Although mobile phones are central
to these actions a successful system
also requires infrastructure, particularly cash in/out agents. Because of
the special nature of the interaction
required between banks, telecoms
7. http://pdf.usaid.gov/pdf_docs/PNADW294.pdf

operators, agents and government,
mobile money throws together a
diverse range of stakeholders, and
as the fragmented take up worldwide
has shown, a special combination
of circumstances, collaboration and
regulation needs to be in place to
make it successful. Mobile money can
be operated using one of three models for business:

Models
Mobile Operator Led models
Here, the mobile network operator
(MNO) launches the service, primarily for mobile money. The balances
of the users ‘wallet’ are maintained
by the MNO in a bank but, as a combined account. The MNO controls all
the account functions for individual
users. Kenya’s M-PESA is a prime
example of this and if the regulatory
framework is in place this can be the
fastest way to spread the use of mobile money – particularly if the MNO
has the majority of coverage in that
country. GCASH in the Philippines is
another.

The Rise of Mobile Money

Models

Bank Led Model

As suggested in the name, this model
is initiated and run by the banks. The
senders and receivers of the money
must have bank accounts. This is a
slower model to gain traction as the
bank needs to work in conjunction
with a MNO to operate this system.
Users are required to sign up for
a bank account. Many do not have
access to banks, or formal identification – and MNO’s do not have the
incentive to create a large agent network throughout the country. Mobile
money in Nigeria is firmly controlled
by the banks and the Central Bank of
Nigeria (CBN) has recently said that
they will not follow the M-PESA model
and allow telecom operators to operator mobile money services alone.
The CBN deputy governor, Trunde
Lemo, said: “We cannot licence telcos
to operate mobile money because they
lack the capacity to do so. What we are
doing in Nigeria is to licence mobile
money operators and then ask them to
go and discuss with the telco who will

provide them (licenced operators) with
the technological platform for their
business.” He added that the Kenyan
experience was not a good model for
Nigeria. “I am sure if the Kenyan central bank had to do it again, they would
do it differently because what Mpesa
has done is to create one big monopoly for the country. A single operator
controls 90 per cent of that country’s
mobile money payment, and this is not
really good enough for any economy.”8

Third Party Model

This model is where a third party
service provider works with one or
more banks to launch and operate a
service. There are many start-ups the
world over launching such services.
BEAM in India now has more than 14
million customers after only three
years of operating.9 BEAM is operator
agnostic – subscribers of any telecom
operator can use the service. Other in
Africa such as Splash in Sierra Leone
has passed its $1m transaction mark
and is still growing.
Many of these third party agreements
are partnerships that offer more than
basic mobile money. MicroEnsure has
teamed up with Tigo in Ghana, Senegal and Tanzania to offer life insurance
products to it’s users

here are a number of
different technologies
that are used to deliver
mobile money solutions,
from STK, USSD to the
more recent advances of
Near Field Communications and QR
codes. Historically it has been STK
and USSD that have provided the
most easily accessible mobile money
platforms â&#x20AC;&#x201C; STK is used by M-PESA
in Kenya â&#x20AC;&#x201C; allowing users of cheaper,
non smartphones to have access to
the services. M-PESA in Tanzania use
USSD to power their service, again for
ease of use and accessibility. However, the more developed nations
with a high proportion of smartphone
users demand a more sophisticated
service. It is hoped that developments
in technology such as NFC and QR
codes will fuel the demand for mobile
money services and solutions in areas
where the service has historically not
proved popular. Also, as the cost of
smartphones is falling a move to more
advanced technology seems inevita-

ble the world over. Already, in Kenya,
Huawei is offering an Android-powered smartphone for under $100,10
and when smartphones begin to be
sold on the second- and third-hand
market, they will be even more widely
accessible. With the improved capabilities of smartphones comes a more
sophisticated mobile money service,
with more services and more capacity
for up selling and advertising different
products. These changes will be accompanied by opportunities, such as
the chance to use graphical interfaces
with illiterate populations.

STK

Mobile money is often delivered by
STK technology. In Africa most mobile
money operators use this technology including M-PESA in Kenya, and
Etisalat in Afghanistan. STK allows
carriers to load a simple set of menus
and applications on SIM cards. The
benefit is that STK works on almost
any device and as such allows access

to rich and poor for mobile money. An
application is programmed onto the
SIM to present a menu to the user and
obtain the user’s input. Transactions
are usually passed through encrypted
SMS. This option is only available on
GSM networks and usually requires
swapping the user’s SIM for one with
the application on it. The SIM application toolkit allows for the service provider or bank to house the consumer’s
mobile banking menu within the SIM
card.
The SIM application toolkit is a standard of the GSM system which enables the SIM to initiate actions which
can be used for various value added
services. The Sim Application Toolkit
consists of a set of commands pro-

12
11. http://en.wikipedia.org/wiki/Mobile_pay

grammed into the SIM which define
how the Sim should interact with the
outside world and works independently of the handset or network.11
The technology is especially useful
for applications that require a simple
user interface. STK is popular as it
is secure, offers good usability and
works well on low cost handsets.

USSD

USSD (Unstructured Supplementary
Services Data) is used by M-PESA
in Tanzania and elsewhere for mobile banking operations. This is a
standard for transmitting information
over GSM signalling channels and is
mostly used as a method for querying the balance in a pre-paid GSM
service. USSD is usually faster than

The Rise of Mobile Money

SMS and does not require any application to be installed on the handset
or the SIM. This allows high speed
interactive communication between
the subscriber and application. The
consumer sends a payment request to
a short code and a premium charge is
applied to their online wallet or phone
bill. The merchant is informed of the
payment and can release the goods.
With USSD the user has to dial a short
number in order to activate the menu.
After each input the data has to be
sent to the server and the new menu
screen sent back which can be time
consuming. USSD is seen as a cheaper and more universal form of messaging than SMS. It is used by India’ s
xpWallet amongst others.
USSD has advantages over SMS such
as allowing for session based communication between the server and
mobile device, guaranteed message
delivery and is more secure than SMS
service.

SMS

This option is a very simple and
straightforward implementation
involving a direct connection between
the mobile money platform and an
SMS gateway. Standard SMS messages are used to transmit the mobile
money transactions which means
no specific application is required on
the handset or the SIM. Bulk carriers
can be used to manage connectivity
to multiple mobile operators and this
technology can be deployed on GSM
and CDMA networks, making it quite
flexible. However, structured SMS is a
lot less secure than other options and
can present some usability challenges
since it is not menu driven.

Web (WAP)

A set of protocols for connecting
mobile phones and other radio devices to the internet. It takes existing
webpages and rewrites them into a
simplified language. The consumers
use web pages or ‘apps’ installed on
a mobile to make a payment. WAP

was developed for mobile money uses
back in the late 1990’s and was incorporated in a range of first generation
smartphone devices for web services.
However there were problems with
cost and speed. Benefits include
follow-on sales, where the mobile
web payment can lead back to a store
or to other goods the consumer may
want and high consumer satisfaction
for quick payments. Many operators will use WAP alongside other
systems – YuCash in Kenya use WAP,
SMS, Voice, USSD and STK. Lipuka,
with 60m + subscribers throughout
SubSahara Africa also utilise WAP for
information services and bill payment.

QR Code

QR (Quick Response) codes are
square bar codes first introduced for
the automotive industry in Japan. A
QR code is read by an imaging device
and interpreted by specific software.
More generally used for marketing purposes recently enabling the
scanned image to direct consumers to
a URL this technology has now been
embraced by the mobile money market for sales. Customers can simply
scan the QR code for instant purchases. They are becoming more popular
in Europe and most recently MMN
have launched a QR code promotion in
conjunction with Thorntons for Easter
allowing consumers try out this technology and buy one of a selection of
Easter eggs for just 1p.12 Customers
can scan the related QR code through
their app and instantly purchase products via their mobile phone.

Near Field Communications
(NFC)

It is estimated that global NFC mpayment transactions will account for
almost US$50 billion worldwide, and
300 million smartphones will be NFCenabled by 2014. Near Field Communications, or NFC, is a contactless
radio technology that can transmit
data between two devices within a few
centimetres of each other. NFC chips

are now being embedded into SIM
cards in mobile phones, enabling an
array of new digital services, such as
ticketing and payments. NFC is used
mostly in paying for purchase in store.
Phones loaded with a smartcard can
be picked up by a reader and do not
require authentication. Charges can
be deducted from pre paid account,
charged to a mobile account or directly to bank account. Peer to peer mode
offers interaction between two active
NFC equipped phones. Payments can
be made to other people or businesses by tapping two phones together. 13
NFC technology has come to its maturity with big ICT and telecom industry
players such as Google, Samsung and
Nokia having embraced the technology.

14

This technology is more applicable to
developed world economies at present
where the infrastructure is in place to
roll the technology out. Many operators have identified NFC use in mobile
money as the conduit for increased
sales and take up of mobile money
in more developed world while the
increased popularity of smartphones
worldwide has made it the technology
of the future for mobile money.
13. http://ijcir.org/volume6-number1/IJCIR%20Volume%206%20Issue%201-new.pdf
14. http://www.cgdev.org/files/1425165_file_Gelb_Decker_biometric_FINAL.pdf
15. http://www.verifonemobilemoney.com/

Merchant

Consumer
T h e Te c h n o l o g y

STK

Future developments –
Biometrics

The Center for Global Development
estimates that over 450 million people
in developing countries have had their
biometric data recorded, and this
number is expected to triple over the
next five years.14 The most ambitious
biometric program – India’s Project
Aadhaar, which is aiming to provide
a universal ID system for all citizens,
including iris scans, ten fingerprints,
and a picture of each face. Financial
inclusion is cited as key driver to collect this information.
These identification schemes are
typically associated with security
initiatives, but they are also seen as a
means of improving delivery of cash
by governments and development
agencies. Biometrics are being used
increasingly by mobile money operators such as Digicel Pacific introducing biometric fingerprint scanning
authentication on payment acceptance devices.15

The Rise of Mobile Money

15

History

History

16

n 2007 M-PESA launched its
mobile money system in Kenya.
In an unusual sequence of events
for a technology led business
model the rise of mobile money
has been led by the developing
world, most particularly Kenya. Whilst
the idea of mobile money has been
around in more developed nations for
some time, the demand for take up
hasn’t. Access to banks, ATMS, online
banking etc has made mobile money
less appealing and less of a necessity.
Developing nations such as Kenya
have had the lack of infrastructure
and access to more traditional banking models to drive the massive take
up of mobile money and have led the
way in it’s development. Kenya is the
outstanding success story of mobile
money (please see case study for
more information). M-PESA launched
in 2007, and now has over 70% of the
population using it and is a conduit
for 25% of the GDP of Kenya.16 Mobile money has now spread rapidly
throughout the developing world and
has large markets in the Philippines,
India, East Africa and increasingly
China. It has rapidly enabled huge
populations who were previously
excluded from the banking system to
gain financial inclusion. As mobile
money networks grow they increasingly become more sophisticated.
While the focus in countries such as
Afghanistan, India and Bangladesh
are initially to improve the reach of the
mobile money networks to the poorest and most remote, as the system
develops and covers the country,

Graph – ref GSMA graph
(source: GSMA 2012)

increasingly sophisticated models
emerge allowing operators to offer more services to those in need,
micro finance initiatives such as micro
insurance, small loans, and other
financial services. The needs of the
poorest are met and financial inclusion becomes a reality. For example
M-PESA in Kenya are now offering
loans for solar electric systems and
small loans for their customers.
‘Mobile money also plays a critical
role in any national financial inclusion
strategy. It not only reduces dependency on cash by enabling digital payments through a mobile device, but
also provides a platform for customers to access a much broader range
of financial services. The complex
infrastructure (mobile connectivity +
networks for cash-in and cash-out
services + mobile money account) that
people use to transact and store their
money electronically can be used by a
range of financial institutions to offer
other services and products, which
improves efficiency and competition in
the financial sector.’17
The developed world can only look on
and watch the rise of mobile money in
the developing world while telecoms
operators and handset manufacturers try and think of ways of enticing American and Europeans to the
market

t has long been known that lack
of access to financial services
limits people ability to climb out
of poverty and slows economic
growth. As mentioned above, the
rise in mobile money has mostly
taken place in the developing
world economies which have a limited
banking infrastructure. Mobile money
has been identified as a major conduit
to increasing the financial inclusion of
the world’s poorest and most remote.
The mobile money revolution has
backing from charities and NGO’s, The
Bill and Linda Gates Foundation has
given large sums of money to aid the
development of mobile money, a $10m
grant for Shorebank International in
Bangladesh, $3.2m for Digical and
Voila in Haiti:
‘We believe that the combined effect
of these interventions will accelerate
the rate at which poor people transition out of poverty and decrease the
rate at which they fall back into poverty. Our strategy also recognizes that
countries are at different stages in
developing an inclusive digital financial system and that we must tailor
our interventions accordingly.’18

18

USAID has been supporting developments in Afghanistan and Haiti, and
18. http://www.gatesfoundation.org/What-We-Do/Global-Development/Financial-Services-for-the-Poor
19. http://betterthancash.org/

other charities and governments are
looking to mobile money to revolutionise the lives of millions. The case
study on Afghanistan demonstrates
how governments, and NGO’s are
uniting to develop mobile money networks in countries.
Statistics from the Better than Cash
Alliance19 has shown that consistently
mobile money networks in many different economies have helped:

Reduce the cost of
cash payments

In Brazil Bolsa Familia grants made
through electronic payments reduced
costs from 14.7% to 2.6% and in the
Philipppines GCASH helps the government provide cash transfers to
hundreds of thousands who have no
access to bank accounts.

Increases transparency and
reduces corruption

Afghanistan National Police (see case
study) have massively reduced corruption by paying salaries via their
mobile phones, while in Argentina
a move to electronic payments has
resulted in those paying bribes to
reduce from 3.6% to 0.3%.

The Rise of Mobile Money

15%

Safer cash movements
14,7%

As in Kenya – people no longer have
to send their cash to their families by
bus or third parties. Electronic payments have transformed the cash
movements in this country.

0,3%

3,75%

As the mobile money network gets
established a new range of services
become available to those excluded
from the formal financial sectors.
Micro finance initiatives –micro insurance and small loans all become more
accessible. In Ghana over 300,000
were able to get access to insurance
for funeral expenses via Tigo. Poorer
Kenyans now have access to small
loans via M-PESA services.

3,6%
Reducing corruption in Argentina

7,5%

2,6%

11,25%

Reducing the cost of cash payments in Brazil

New market Access

Research from the Bill and Linda
Gates Foundation has shown that
rather than solve all financial exclusion in one leap countries will pass
through stages of development of a
mobile money system, starting with
connectivity, passing onto remote
payments and eventually onto providing a range of financial services. This
model has most definitely been seen
in Kenya where a sophisticated range
of products is becoming available.20
A large number of government organisations as well as NGOs are working
together to make financial inclusion
a reality. From MercyCorp in Haiti
to USAID in Afghanistan to Save the
Children in Pakistan mobile money is
being seen as the tool than can make
a difference. NGOs assume the role of
advisors, educators, and even consumer by using the systems to distribute funds.
Emily Martyr, Mobile Money Africa
programme director. “We see some
enduring themes – like how to suc-

cessfully monetise services, as well
as the challenge of reducing risk and
improving security.
She continues: “at the same time, the
more developed mobile money markets in Africa such as South Africa
and Kenya are seeing exciting, and
increasingly sophisticated services
emerging. Consumers are responding well to new offerings like microfinance and insurance policies via mobile, and there are also signs that new
technologies like NFC will be gaining
ground in the near future.”21
Mobile money presents an unparalleled opportunity to deliver a basic
service of modern financial services
to the “unbanked” millions across the
world. The World Bank predicts that
by 2020, mobile money could impact
the lives of some 2 billion people in
developing countries, allowing banking to be used by the poor and isolated. The mobile revolution, which has
already reached millions of the poor,
can be used to improve lives, increase
financial inclusion and stimulate economic growth.
While it can be seen that mobile money is transforming the lives of those
in the developed world a recent report
from the US found that 8.2% of households in the USA are also unbanked
which equates to 17 million adults.
More unofficial banking channels are
being utilized in the US, aswell as
Europe – payday loans, cheque cashing, pawn shops etc. A recent World
Bank report highlights that 11% of the
unbanked actually live in high income
economies (compared to only 18% in
North Africa and Middle East).22 Can
the lessons from the developing world
be applied to developed countries to
create a more equal society?

19

The future for Mobile Money in the Developed World

The future for Mobile Money
in the Developed
World

20

o while the developing
world has seen a massive
expansion in the use of
mobile money the take in
the developed world has
been slower. Access to an
established far reaching banking service, with bank branches and ATM’s
readily available has meant that no
urgent need to change exists. People
are mostly happy with their banking
arrangements.
A recent Yougov report reported than
only 23% of the UK population are
interested in using their mobile phone
instead of cash and only 10% say they
are likely to use such a service in the
future.
• While 5% agree that they will get
the technology as soon as it’s
available, almost half (48%) won’t
be in a hurry to use the mobile
service
• More than a third (36%) of respondents admitted they didn’t
know if their existing phone was
enabled to make cashless payments with a technology known as
Near Field Communications (NFC)

The Rise of Mobile Money

21

The future for Mobile Money in the Developed World

•

The main reason for respondents
not planning to use mobile payment in the future is that they
are happy with the way they pay
now (67%), while concerns about
security and fraud (56%) were also
a factor

Yougov concluded that:
‘There will always be consumer concerns about adopting any new technology, from data security to theft,
changing mobile providers to correcting mistaken payments. Consumers need to see that these genuine
worries have been addressed before
they wholeheartedly embrace mobile
payments. Our research suggests that
consumers see using NFC technology
as inevitable, and they are expecting supermarkets, mobile phone and
consumer electronics retailers to be
the first retailers to offer contactless
payments.’23
Mobile money has not seen the uptake
that it has in the developed world but
that is beginning to change. Recent
data from tealeaf24 show that the
younger age groups are changing
their habits. In the UK 57% of 25-34
year olds and 53% of 18-24 year olds
say they have accessed banking on
smartphones or tablets whether via
app or mobile web. Data from the
Mobile Payment Index25 has shown
that awareness of contactless mobile payments has doubled since May
2012, ownership of NFC devices has
also doubled over the past six months
and over half (52%) of those that
already have the technology on their
phone have used it.

22

In the USA Tealeaf data shows that
while accessing banking via a desk or
laptop is still by far the most popular
at 80% having done so, 28% of 18-24

year olds do so via smartphone website and 29% via smartphone app.
A year ago Barclays launched PingIt which allows customer to link
accounts via their mobiles with a
SMS. The service was signed up to
by 500,000 users in 6 months.26 In
November the UK Payments Council announced it was working on an
industry wide money transfer service. The new service which will be
launched in Spring 2014 will enable
secure payments to be made directly
to and from an account without the
need to disclose bank details, simply
using a mobile phone number. Eight
banks representing 90% of UK current accounts have committed to the
scheme.
Visa believes that by 2020 more than
half of all payments made in Europe
will be done through mobile devices
and is continuing to invest in the
sector.27 They have teamed up with
Monitise to provide payment solutions and mobile banking technology
to financial institutions in the region
that currently covers 3000 banks in 36
countries.
It seems that the mobile money revolution is about to start in Europe at
least.
Contactless payment and NFC is also
making gains in the developed world
market with a number of new players entering the market. Research
from ICM28 shows that while consumer
awareness is high at 80% only 8% of
people had actually used contactless
payment methods. Reasons for this
include lack of retailer support and in
store promotion as well as real security concerns – what happens if I lose my
mobile? What if the battery runs out?

and Visa are all working hard to get
a share of the mobile money market.
They need to make the service accessible, easy to operate and secure before people will readily take it up – incentives will help. The mobile money
revolution is coming to the developed
world – just a bit slower.

Conclusion
The mobile money business must
Key finding from the report are:
•
•
•

34% of consumers would use their
mobile as a wallet
This figure rises to 46% when
asked just to smartphone owners
More than half would use a mobile
wallet if their security concerns
were addressed

Jamie Belnikoff, Associate Director at
ICM Research who led the research
concludes: “Mobile wallet is about
more than just paying: it allows consumers to manage their vouchers and
discounts, loyalty cards, event tickets
and public transport passes all in one
place. Whilst people appreciate these
advantages, they expect a range of
incentives and benefits to get them to
pay this way. However even with this
encouragement, their genuine security concerns – and, as we’ve seen in
our recent research into contactless
payments, – the lack of terminals in
shops and absence of in-store promotion are also preventing broader
consumer take-up.
A wave of new mobile wallet products are hitting the market aimed at
persuading the developed world to
embrace the mobile money revolution, Google Wallet, Apple’s Passbook,
28. http://www.icmresearch.com/2013-the-year-of-the-mobile-wallet

stand alone as the only technological
advancement that has been embraced
and developed in the developing world
before the more developed nations.
Mobile money has paved the way
for financial inclusion and has been
seized by governments and charities alike as a mean of improving the
lives of millions of poor and excluded
people. In countries such as Kenya
and Afghanistan it has revolutionized
the way in which a huge portion of the
population carry out their finances
and has opened up a whole raft of
micro finance products that was previously just not available to these people. While the telecoms operators and
banks try and find a way to increase
their coverage and sell more products
in the developing countries the operators in the developed world face the
challenge of actually getting mobile
money accepted by a population who
already have access to services and
products it is offering. There is no
doubt that mobile money will take
hold the world over but in what guise
it takes in these developed economies
remains to be seen. New technologies, entrepreneurial investment, and
the shear number of large players
competing for the market makes the
mobile money space a fascinating
area of technological development
23

Kenya/M-PESA –

Kenya/M-PESA – The Runaway Mobile Money Success Story

The Runaway Mobile Money Success Story

aunched in March 2007
M-PESA (Pesa means cash
in Swahili) has been the
overwhelming success
story of the mobile money
phenomenon.
Within a month of launching in 2007
M-PESA had 20,000 customers, 2
million by the end of the first year,
and just under 10 million within three
years, representing 50% of the country’s population - statistics and growth
that no other company, or country
has been able to emulate even closely.
Continent wide Kenyans far exceed
others in the use of mobile money
with 60.3% of all Kenyans sending or
receiving mobile money compared to
Tanzania’s 14.1%, Nigeria’s 0.5% and
South Africa’s 3.2% usage.29
Graph mobile figure Source: World Bank 2010

So what circumstances have allowed
M-PESA and its operator Safaricom to
achieve such massive growth in such
a short time?
In a country where almost two thirds
of the population live below $2 per
day, M-PESA have proved that there
is clearly a massive market for mobile
money amongst the poorest, unbanked population. A recent report
produced for the World Bank has in
fact found that over 60% of the poorest Kenyans own a mobile phone and
very few of those use any other application than M-PESA. However, it is
not only the poor who have embraced
mobile money with 73% earning over
$2 per day using M-PESA.29
M-PESA and Safaricom are not alone
in the mobile money market of Kenya
with Airtel’s Zap, Orange Money and
Yu Money competing for a share of
the market. However with Safaricom
holding 64% of the mobile subscription market in Kenya (with Airtel
16%, Orange 10% and Yu 9%)30 they
are in prime position to control the
market. It is generally accepted that
M-PESA has been so hugely successful in Kenya because of Safaricom’s
significant market dominance, strong
branding and the openness of the
Kenyan regulator to encourage innovation – allowing M-PESA to emerge
and flourish, while the social, cultural
and economic make up of the country
has produced a perfect environment
for growth.

The Rise of Mobile Money

Graph ways of transferring money before and after MPESA (source World Bank 2010)
50%
45%

2009

2006

40%
35%
30%
25%
20%
15%
10%
5%
0%
M-PESA

Hand

Bus

Post Office

Direct
Deposit

The aspects of convenience, accessibility, cost, support, and security of
mobile payment systems have led to
high usage by individuals and microbusiness operators in Kenya.
Prior to M-PESA, there were few
financial alternatives, especially for
domestic remittances. The most common way of sending money around the
country prior to M-PESA was either
through the bus system or the post office system, both of which were expensive, inconvenient and risky. Prior to
the widespread uptake of the M-PESA
application, Kenyans incurred extensive cost and time expenses to send
money to their relatives in the countryside, go to ATMs/banks, and transact.
M-PESA has significantly helped to
relieve these inconveniences.
There are over 40,000 M-PESA agents
in Kenya today. Studies have shown
that about 40% of M-PESA money
transfers are sent to parents and 8%
to children suggesting that it has filled
a domestic role in a country where
sending money to parents is still of
strong cultural importance. With the
huge and increasing urbanisation of
the Kenyan population this method
of sending money back to traditional
family homes is vital to many Kenyans.
31. http://www.centralbank.go.ke/index.php/cbk-annual-reports

Money
Transfer

Cheque

Someone
else

Other

So, can Safaricom and the other
mobile money providers continue this
massive growth and can Safaricom
hold onto their massive market share?
Data from a Central Bank of Kenyan
annual report 2012 show that the
amount of money transacted by Kenyans using their mobile phones grew
by over 50% to hit Sh1.4 trillion in the
year to June 2012. The number of
transactions increased by 39% to 507
million transactions per year. M-Pesa
accounted for over 76% of the number
of agents with Zap at 19%, Yu 2.8%.31
The CEO of Safaricom, Bob Collymore,
has recently said that M-PESA is a key
driver of the companyâ&#x20AC;&#x2122;s revenue which
now directly employees 50,000 people.
Revenue from M-PESA increased by
43% to $203m, has 40,000 agents after it increased the numbers last year
by a staggering 46% while registered
customers grew by 6% to 14.9million.
As recently as March 2013 Kenyaâ&#x20AC;&#x2122;s
largest mobile operator Safaricom
increased the cost of moving funds
through M-Pesa following a new tax
on transaction fee earned from mobile money transfer. Safaricom said
customers transferring more than
Ksh101 ($1.2) will have to pay 10 per

25

Kenya/M-PESA – The Runaway Mobile Money Success Story

26

cent more on account of a government
decision to introduce a similar tax on
earnings from the service. Safaricom
is opposed to the new tax arguing that
it would add more costs to customers and therefore negatively affect the
sector.
“As Kenya’s largest taxpayer, we appreciate the need to support government as it seeks to reach its financial
obligations. However, we maintain our
position that a tax on mobile money
is at that this time premature and is
likely to have a negative impact on the
country’s financial deepening agenda
by creating an unnecessary barrier for
wananchi who are most in need of basic financial services, “Bob Collymore,
the company CEO said.32
However Safaricom are not finished
with their ground breaking financial
offerings for Kenyans. In October
2012 they partnered with M-KOPA for
a pay-as-you go solar lighting solution.33 This allows low income families
credit in an affordable package to own
assets that are basic and essential in
their lives. Later in the year in November they also launched M-Shwari, a
revolutionary banking service in conjunction with the Commercial Bank of
Africa which allows customers to save

and borrow money and earn interest
on money saved. Emergency loans
available through mobile phones at
7.5% interest are also available making M-PESA not only still the most
innovative and major player in the
Kenyan mobile market but provides
ordinary Kenyans with vital financial
inclusion tools.
It seems that mobile money is growing
strongly in Kenya and Safaricom continue to dominate the market. While
other operators are working hard to
get in on the act it seems that Safaricom and M-PESA have a strong hold
on the market and it will be difficult to
penetrate this market
Kenya has the world’s highest rate of
person to person mobile payments
but many businesses are yet to utilise
the full range of solutions for mobile
money. Whilst this is changing fast
it is the SME’s rather than the multinationals that are adopting mobile
money on the largest scale. SME’s are
adopting M-PESA faster and increasing customer to business payments is
the next challenge for the continued
growth of mobile money in Kenya

Along with Kenya another success story in the
world of mobile money is
the Philippines:
‘We, at Mastercard,
estimate that out of the more than
130 mobile money deployments there
are roughly 50 million accounts – and
that half of these 50 millions accounts
come from only two countries – Kenya
and the Philippines.’34 Says Mung Ki
Woo, Group Executive, Mobile, MasterCard Worldwide
SMART communications launched
SMART money in 2001 in partnership
with Banco de Oro with GCASH from
Globe Telecom arriving in 2004.
Globe subscribers have access to a
cashless method of remittance, loan
settlement, salary payments, and bill
payments. They rely largely on non
banking agents – such as pawn brokers and retail outlets for cash in/out
transactions.
The Smart service allows international and domestic money transfers,
salary payment, loans repayment and
bill payments. Cash in/out is done
through Banco de Oro branches,
ATMS and SMART centres and in
rural areas at pawn shops and money
changers.
Both have seen consistent growth in
their subscribers over the past few
years. In 2001 Smart was seeing
$30-45million per month in mobile

transactions and growth at 10-15%
per year.
Globe currently has 18,000 GCASH
locations throughout the country with
Smart Money users having access to
25,000 Mastercard merchants and
cash withdrawals at over 9,000 bank
ATMS. Key to their success is also
the network of more than 1.3 million
retailers throughout the country who
are users of Smart Money and also
function as merchants.
It has been recorded that 37% of
municipalities in the Philippines do
not have a bank branch but 80% of
the population have a mobile phone.35
The central bank recognised that a
significant opportunity existed to allow
telecoms operators to compete with
banks in this market to promote financial inclusion and help in the drive
to make remittances to family simple,
cheap and safe.
“The mere entry of competition
has improved the cost and quality of
services and that is really a big win.” –
Nestor Espenilla Jr, Deputy Governor
of Bangko Sentral ng Pilipinas (BSP)
and Chair of the Alliance for Financial
Inclusion (AFI) Steering Committee.36
Three key factors have contributed to
the success of mobile money in the
Philippines:
•

The already high mobile usage
of the population along with a
demand for access to finance,

domestic and international remittance flows.
The Bangko Sentral ng Philinas
(BSP) has enabled operators to
offer e-money solutions.
The actions taken by SMART and
Globe, the key operators in the
mobile market in the Philippines
to design strong products.

Penetration of mobile phones has
risen from 3% in 2000 to 68% in 2012
and the country has a wide ranging
and extremely reliable mobile network– a factor that is key to consumer
confidence in mobile money success.
Often referred to as the texting capital of the world Filipinos have quickly
adopted mobile money as an everyday part of their life, especially as
only 26% of Filipinos have access to
formal financial services.37 The Philippines has a unique combination of a
semi informal financial system with
the extraordinarily large use of pawn
shops for financial help, combined
with a high percentage of overseas
and urban-rural remittance flows create a unique environment for the rise
of mobile money.
Globe, and Smart, to a lesser extent
have utilised the pawnshop reliance
to their advantage by creating an alliance with them for a far reaching
cash in/out network.
Filipinos travel throughout the world
for employment with the Middle East
a major destination for overseas
worker. 8 million38 Filipinos working
overseas remit about $18 billion to
family members each year. External
remittances alone make up 10% of
GDP and internal remittances sent by
individuals working in urban areas to
family members in the provinces are
an important part of daily life in the
Philippines.
In 2004 Smart launched SMART
Padala which allows overseas workers remit directly to SMARTY account
holders. By 2006 this service had a

monthly average of 1.5million users
sending over $15million.39 These
overseas remittances have vastly
increased the popularity of mobile
money in the Philippines and has created a more convenient and cheaper
option to the likes of Western Union.
As is the case with many developing
countries the rapid urbanisation of the
population of the Philippine population has increased the need for family
remittances over longer distances. As
in the case with Kenya – the rise of
mobile money has transformed the
way in which the poorer population
send money to their extended families.
The actions taken by the Banko Snetral ng Pilipinas, Globe and Smart
have gone a long way to creating a
conducive environment for the growth
of mobile money by allowing non
banking agents to perform cash in/
out operations. Pawnbrokers, rural
banks, money changers and airtime
sellers have been bought into the fold
and enabled far reaching access to
rural areas which would otherwise
have been impossible in such a short
time scale.
Finally, the cases of M-PESA in Kenya
and SMART in the Philippines clearly
shows that mobile money launched in
environments with one or two telecoms operators controlling the market
creates a perfect platform for the rapid
spread of mobile money services.
As for the future for mobile money in
the Philippines - at present one of the
major differences between M-PEAS
in Kenya and the system in the Philippines is the use of other non-bank
agents as mentioned above. Currently
these agents are not able to register
new users as the agents in Kenya are
able – relaxation of this regulation
would massively and very quickly increase the number of registered users,
particularly in rural areas. For the sake
of increased social inclusion amongst
the most isolated and excluded this is
the one change that is required

he rise in mobile money
users has finally reached
India and the future looks
promising for the vast
numbers of Indians that are
excluded from the formal
money sector.
Estimates believe that only 30,000 of
the 600,000 villages in India have bank
branches and that nearly two thirds,
or 700m Indians, are unbanked.
In India the opportunity for mobile
money is clear enough. More than half
the country’s 1.2bn population have
no bank account, but it is the world’s
second- largest mobile phone market,
with more than 900m subscribers. If
only a small fraction of these customers take up the use of mobile money,
India could easily become the world’s
mobile money leader.40
Unusually it is not only the major mobile operators that are taking the lead
here dispelling perhaps the myth that
only those with the highest mobile
subscribers can make a go of making mobile money work, as has happened in Kenya and the Philippines.
A number of operators have tried,
some failing (Nokia) to attract enough
customers and the take up of mobile
money has not seen the growth that it
has in Kenya and the Philippines.

30

In India as with most developing
countries the migration of people to
the cities for work has increased the
need for remittances within the coun-

try. Mobile money provides the means
to send money to relatives back home
quickly and safely. As in the Philippines, India also has a high number of
international migrant workers working
particularly in the Middle East which
creates another important market.
Nearly 69% of the Indian population
are unbanked, mostly because current
banking channels are not accessible to
the very poor or rural population. Mobile banking in India has the capacity
to increase financial inclusion to these
people. Whilst 69% are unbanked India
is the second largest telecommunications market and has more than 650
millions mobile phone customers.41
Forecasts have predicted that there
would be over 100 million 3G broadband subscribers by 2015, and whilst
these have traditionally been urban
growth by 2015 25% of subscribers are
thought to be rural users.42
A cautious, bank led, regulatory
framework is causing concern and
has led to problems with the launch
of many services. The Reserve Bank
of India, the central bank, has classed
mobile money as a banking activity
rather than a mobile operators one
and has applied strict rules. All operators trying to enter the market must
partner with a bank and all customers
must in effect have a bank account
which makes the service more complicated than the basic Kenyan model.
Whilst allowing for more on-selling
of savings accounts etc this is making the take up much slower. Lengthy
identity checks put off, or even ex-

clude many of the population who may
benefit most from the system.
This combined with some cultural
differences between Indians and Filipinos has led to mobile money being
slower to take hold in India. Nokia
pulled out of the mobile money market in 2012 after 2 years in the market. Nokia were able to sign up 1.2m
customers but failed to reach enough
customers.43 Indians still rely on traditional payments of cash and cheques
and are much more conservative than,
say Filipinos with their money matters. Also Filipinos are mobile ‘savvy’
– the texting capital of the world – and
have embraced mobile money quickly,
Indians are much less ‘mobile minded’ and have been slow to take up the
electronic transactions, particularly in
the rural areas.
However, it now seems that a number
of operators have started to make
inroads to the mobile money market.
BEAM has signed up 14m customers and do 1 million transactions per
month and have in some ways overcome the major obstacle to mobile
money in other countries – the fact
that most mobile money services are
restricted to one network. The operators in the Philippines have already
said that there must be cross network cooperation in order for mobile
money to expand much further. Only
countries that have one very dominant operator – such as M-PESA with
Safaricom can overcome this without
cooperation. BEAM are an example of
the Third Party mobile money model,
and one of only a few that have been
successful worldwide. They work on a
cross mobile operator platform allowing users on any network to interact.
More recently, Beam Money, mobile
payment system has announced the
launch of iPhone app named Beam
Wallet. This facility will enable iPhone
users to use Beam Money facilities on
the go. Beam Wallet is a totally safe
and secure application as data is not
stored on the mobile.
“With an increasing section of Indians
becoming tech-savvy and acquir-

ing smartphones, it is vital for us to
make our services available at different points of use with the underlying
thought of bringing convenience and
delight to our customers. In view of
our constant endeavour to innovate
services; we have launched Beam
Wallet for iPhone users. We intend to
offer convenience and ease of transacting anytime, anywhere with anyone irrespective of their device,” said
Anand Shrivastav, CMD, Beam.44
This year, Aircel, India’s fifth largest and fastest growing GSM mobile
service provider and country wide
India operator, will be partnering with
local banks to offer money services to
mobile subscribers.

The Rise of Mobile Money

“Aircel prides itself in offering its subscribers the most innovative mobile applications that meet the unique needs
of consumers in India,” said Geoff King,
Head of Mobile Banking, Aircel.
“We applaud the pioneers in Africa,
Asia and the Middle East who have
launched closed-loop mobile financial
services and reached so many consumers so quickly,” said Bill Gajda, Head of
Global Mobile Products for Visa Inc. 45
M-PESA joined the Indian market in
2012 for Vodafone customers, Indians
second largest mobile operator. M-PESA
has been signing up agents in villages
and advertising heavily. Mr Jaganathan
from Vodafone/M-PESA says,
46. http://www.ft.com/cms/s/0/a09c0f68-4a9a-11e2-9650-00144feab49a.html#axzz2NtC17Blx

“My personal opinion is that 200m300m [mobile money] users will be
created in this industry over the next
three years.”46
India’s Project Aadhaar, which is aiming to provide a universal ID system
for all citizens, including iris scans,
ten fingerprints, and a picture of each
face – has been explicitly linked to
financial inclusion expansion will allow many more to register with mobile
money services in the rural areas
where many have no formal means of
identification

33

Can mobile money really tackle
corruption in Afghanistan?

Can mobile money really
tackle corruption
in Afghanistan?

fghanistan is on the leading edge of the mobile
money phenomenon
spreading through the
developing work at a
rapid rate. In a country of
30 million where 70% of the population is illiterate and fewer than 5% of
the population have a bank account
mobile money is finding a market
hungry for change.
Today there are 18 million active mobile phone subscriptions in a country
of only 28 million. This explosion has
created a network which now bridges
the rural-urban gap and has made
Afghans more connected than ever.
M-Paisa was first introduced to
Afghanistan in 2009 and trialled with
the Afghan police for salary transfer.
The results were immediate resulting in costs being reduced by 10% by
payments not being made to corrupt
middlemen. Policemen thought they
had received a 30% salary increase
as middlemen were no longer able to
skim cash from legitimate salaries.47

34

M-Pasia is operated by M-PESA/Vodafone who have successfully transformed the Kenyan mobile banking
system, in collaboration with Roshan,
47. http://www.afghanvoice.org.uk/avfm/news.php?news=1184
48. http://www.ammoa.org/

Afghanistan’s biggest mobile operator. Now the service has 1.2 million
subscribers in the country.48 40% of
Afghans own a mobile phone so it is
predicted that Afghanistan will become one of the mobile money success stories of the world.
The service’s functionality has also
grown beyond direct-payroll deposits in the public sector to include
mobile person-to-person transfers,
point-of-sale merchant payments and
microfinance loan agreements and
repayments. Western Union signed an
agreement with Roshan last year to
enable international money transfers
to be sent directly to M-Paisa mobile
subscribers in Afghanistan.
M-Paisa has followed the African
model of using a network of agents for
cash in/out transactions, avoiding the
need for bank accounts and bypassing
the massively corrupt banking system.
Afghanistan has been a forerunner of
the financial inclusion for the unbanked allowing mobile money to be
used for microfinance. NGO’s such
as USAID have worked hard with the
operators to use the mobile money
system as an extremely effective tool
to increase financial inclusion of the

The Rise of Mobile Money

poor, whilst reducing corruption.
USAID have been instrumental in assisting the mobile money operators
to establish a service that will enable
this financial inclusion and to promote
economic growth, giving grants of $2.1
million to M-Pasia, MTN and Etisalat:
“Increasing access to safe, sound financial services for the under-served
majority in Afghanistan and building
transparency in the financial system
is fundamental to economic growth,”
said Dr. Shah, of USAID in 201149
Amirzai Sangin, Afghanistan’s Minister of Communications and Information Technology, said, “The growth
of the telecommunications sector in
Afghanistan over the past nine years
has been phenomenal. Afghans who
have access to mobile phones and
no bank branch in their vicinity will
greatly benefit from this service.”
USAID is working with operators on
networks that allow utility bill payments and micro finance initiative
such as micro insurance and loans.
USAID are working with the private
sector in providing consumer education to Afghans who are historically
wary of formal banking. They have
even been working with the Associa-

tion of Mobile Money Operators of
Afghanistan to harness the creativity
of Afghanistan’s brightest youth to
develop mobile money applications
to address problems faced daily by
Afghans. More than 5,000 students
across the country submitted ideas
for how mobile money could be used
by the Government to provide basic
services to more Afghans.50
M-Paisa has three major competitors in Afgan Wireless, Etisalet and
MTN. Launcehed in 2011, Etisalat’s
service has recently been awarded
the ’Achievement in Social Inclusions
2012’ award at the Connected World
Forum conference in December 2012.
The award is presented to organizations that have made the greatest
difference to their community through
social inclusion. Etisalats mHawal mobile money service gives the
unbanked population of Afghanistan
access to a banking system. Already,
Etisalat have enabled electricity bill
payment and national utility bill payment and have 50,000 registered users with the goal to reach 300,000 by
first quarter of 2013. Afghanistan is
a clear example of how mobile money
can be used by government and
NGO’s to dramatically change the lives
of a remote population.51

TN Mobile money is a
mobile payment service
which operates across
several African countries
including Uganda, Ghana,
Cameroon, Cote S’Ivorie,
Rwanda, and Benin. The company
works in conjunction with other
organisations, banks and technology
companies. MTN is now the second
fastest growing telecom service provider in the world.
The service was first launched in 2010
in Cameroon and it has gone from
strength to strength since then. Six of
the eight services that are growing the
fastest in the mobile money sphere
are in East Africa and after Kenya,
Tanzania and Uganda. Rwanda is the
new growth story.
There are two providers in Rwanda,
Tigo Cash and MTN Mobilemoney.
MTN was launched in 2010. Two years
after its launch MTN has 415,000
registered customers, 6% of MTN’s
mobile base.52

36

Rwanda’s mobile phone penetration
rate seems to be improving greatly, as
55 per cent of the population now has
an access to the devices - in December 2012, the mobile phone subscrip-

tion was at 53.1 per cent, an indication
that the penetration has increased by
1.9 per cent within one month.
Latest statistics from Rwanda Utility
Regulation Authority (Rura)53 indicate
that out of a population of 10.5 million,
a total of 5, 902, 630 Rwandans now
have access to a mobile phone.
MTN have continued to roll out services for the population of Rwanda,
last year introducing MTNMMO which
allows senders from outside Rwanda
to transfer money from debit card or
bank transfer through the internet to
a mobile phone in Rwanda.
“We will continue to add new services
to MTN Mobile Money, and grow our
agent network, now standing at over
700 agents across Rwanda,”Albert Kinuma, of MTN stated.54 Rural Rwandans are quickly realising that it is
easier to access their money through
one of these outlets rather than take a
long trip to a bank.
Mobile money in Rwanda now allows
people to instantly make payments for
utility bills, school fees. This direct
competition has prompted the banks
to form partnerships with the mobile
operators to offer more services.

Bank of Kigali has partnered with
both MTN and Tigo to provide mobile
money services.
“Banks are beginning to realise that
delivery of financial services through
mobile telephony is where the real
innovation and development is taking place in the retail market,” said
David Kezio-Musoke, the MTN head of
public relations.55
Uganda is proving to be a huge and
very lucrative market for MTN in Africa. The mobile money business has
taken hold in Uganda also as much as
it has in Kenya, Uganda has a rapidly
urbanised and migrant population.
Money remittances within Uganda
from urban to rural populations and
from overseas migrant workers in
UK, Kenya and Tanzania have led to a
sustained growth in users.
Data from the Bank of Uganda indicate that the number of mobile money
transactions had reached 84.7million
in 2011, MTN mobile money recorded
over 25 million transactions during
December 2012 in Uganda another
150,000 subscribers were added in
January 2013.56
Figures released in March 2013 show
that in Uganda 78% subscribers are
registered for mobile money with
more than 2 million transactions each
month. (group results MTN), in Ivory
Coast the business reported MTN Mobile Money ‘up strongly.’ 57 MTN haves
competition from Airtel Uganda,
55. http://allafrica.com/stories/201301150053.html?page=2
56. http://www.telecompaper.com/news/mtn-uganda-fy-revenues-up-166--929490
57. http://mobilemoneyafrica.com/details.php?post_id=1106
58. http://mobilemoneyafrica.com/details.php?post_id=1063
59. http://www.bdlive.co.za/business/technology/2013/03/12/mobile-operators-to-show-robust-growth

Warid Uganda, Uganda Telecom and
Orange Uganda. These five operators,
by 2010 had signed more that 15.4
million subscribers – more than half
the adult population of Uganda! 58
Most recently MTN has started expanding it’s partnerships in Ghana
with Mobile Financial Service Africa
offering its KwikAdvance credit service. It allows mobile phones currently on MTN networks to access up
to 40% of their salary before the end
of the month.
In Uganda it has partnered with Fenix
International to launch the ReadySet
battery charging system with the
objective of improving the productivity of MTN’s mobile money agents and
broad retail base by providing sustainable power.
“More entrepreneurs operating small
businesses are emerging through
use of the ReadySet system,” says Mr
Kershaw, MTN’s executive for investor
relations.59
With a 190 million subscribers in 22
countries, including Afghanistan,
Nigeria, South Africa and Zambia
MTN has a massive platform to roll
out mobile money. Most recently
MTN Zambia has recorded increased
transactions. With 400 mobile money
agents across the country, they have
500,000 registered users in Zambia while Cameroon is also showing
strong progress

37

Tigo –

Tigo – Making a Real Difference for
Migrant Workers from Central America

Making a Real Difference for Migrant Workers
from Central America

obile penetration across
Central America stands at
90% whilst only 35% of the
population have access to
bank accounts.
Mobile money has been slower to take
hold in Latin America, with the exception of Haiti which has seen massive
investment ($10m) from USAID and
the Bill and Linda Gates Foundation.60
Tigo Millicom is a telecoms company
operating in 13 countries across Latin
American and Africa, offering mobile
money services in 7 of these – Tanzania, Ghana and Rwanda, Honduras,
Guatemala , el Salvador, and Paraguay.
Mobile money has been slower to take
hold in Latin America, with the exception of Haiti which has seen massive
investment ($10m) from USAID and
the Bill and Linda Gates Foundation.
Tigo Money launched in Guatemala
and Honduras in February 2011. At
that time Juan Carlos Arriga, Head of
Mobile Financial Services for Tigo in
Guatamala commented:

38

“I believe domestic, but most importantly, international remittances will
play a major role in the roll out of
mobile money in the region. The World
Bank estimates that around 6 to 7 %
of Guatemalans reside abroad, mainly
in the US . Guatemala received about
$4.1 billion in remittances in 2010 —
about 9.8 % of its total gross domestic
product. Guatemala’s dependence on
60. http://www.gatesfoundation.org/
61. http://www.gsma.com/mobilefordevelopment/tigo-money-launches-in-central-america

remittances highlights some latent
demand which we want to address
with Tigo Money in the long run.”61
By June 2012 Tigo announced that
it had increased the number of Tigo
Money agencies in Guatemala from
1400 to 2000 in order to reach the
most remote population. Whilst
started a as a remittance service Tigo
money has now expanded its operations to include microcredit solutions.
Agents are operating out of a number
of outlets such as convenience stores,
drug stores and petrol stations across
the country. Tigo are now planning
to increase the number of agents to
3000 by the end of 2013.
From September 2012 Tigo money expanded further to allow international
remittances direct to their mobiles.
Charges for international remittances
fell from 15-25% to just 6%. However,
Tigo and other mobile money providers are facing much more complicated regulatory restraints compared
with the mobile operators in Africa.
Policies for transferring money from
the US is over complicated by variations between States.
Although it has taken some time for the
mobile money system to overcome the
strict regulatory restrictions imposed
in the region the latest figures show
that not only is the network expanding
but Tigo and others are working hard
towards reducing cost for, in particular,
international remittances for populations that desperately need help